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V-A DRUG PRICE DISCOUNT RESTORATION BILL ADOPTED

Executive Summary

V-A DRUG PRICE DISCOUNT RESTORATION BILL ADOPTED by the House V-A/Health Care Subcommittee in a voice vote during an Oct. 2 markup. The bill (HR 2890), which will be reported to the full Veterans Affairs Committee, requires manufacturers either to roll back prices to V-A hospitals and health care centers to September 1990 price levels or to renegotiate newer, low prices for the Veterans Affairs Department. Noting that the bill has "about 40 cosponsors," including "several" Republican and Democratic committee members, Chairman Montgomery (D-Miss.) said the legislation is needed to reverse price increases that have cost the V-A an estimated $ 60 mil. this year. Manufacturers have increased prices since September 1990 to prevent having to offer the same price breaks formerly offered to V-A to the substantially larger Medicaid market, as required under the Medicaid rebate law enacted last year. Pharmaceutical Manufacturers Association President Gerald Mossinghoff indicated at a hearing earlier this month that the industry will accept legislation to exempt V-A prices from Medicaid "best price" calculations, but not a measure to roll back V-A prices ("The Pink Sheet" Sept. 16, p. 13). Montgomery emphasized that HR 2890 "is only aimed at solving V-A's problem" and is not intended to force all Medicaid prices down. On the other hand, the chairman cited reports by Sen. Pryor's (D-Ark.) Senate Special Committee on Aging staff and by the HHS Inspector General's Office, which call for legislation to roll back Medicaid best prices to levels offered before enactment of the Medicaid rebate law. The sole dissenting vote on the subcommittee was by Rep. Brewster (D-Okla.), who expressed concern that "any time you artificially place price limits on a particular segment of something, you raise the price limits somewhere else" unless cost shifting is accounted for and prevented. Brewster, who is a pharmacist, said he is concerned that legislation to relieve V-A will not address price increases to the Medicaid drug program and to the near-poor not served by Medicaid who face increasing difficulties paying for drugs. He called industry prices "at least exorbitant and maybe obscene." Rep. Edwards (D-Texas) suggested that if the pharmaceutical industry does not respond voluntarily to market incentives for containing drug costs, Congress will be forced to seek more punitive measures involving reduction of patent terms. "If the drug manufacturers aren't willing to be more reasonable in their pricing, perhaps [Congress] will open up a discussion of our patent policies," Edwards said. "This is not a free market industry; they have an absolute monopoly on the sales of certain products," he argued. "So if manufacturers don't want us to get involved in the market, let's deal with the patent policy, which is a government process." Rep. Slattery (D-Kan.) noted that the Energy & Commerce Committee, on which he sits, currently is exploring market exclusivity policies with regard to the Orphan Drug Act. He said that the committee is "going to be looking at this patent question and looking at it very carefully." Slattery also sounded a general warning to the industry. "I think the . . . pharmaceutical industry in this country is treading on some very thin ice. We're learning that greed can be punished," he said. "Just be careful. As one member of Congress, I can tell the industry I am very alarmed by some of the information that has been disclosed by Sen. Pryor's efforts."
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